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U.S. stock futures index's were sharply down this morning after China's yuan fell sharply for a second day. China set today's yuan daily midpoint reference even weaker than Tuesday's devaluation, pushing the currency down 4% over the last two days.

The U.S. dollar is slipping again fractionally and WTI oil is testing its new resistance.

Markets are expected to open lower with the prospects of improving by mid morning, perhaps even seeing some green.

European markets are sharply lower today with shares in France off the most. The CAC 40 is down 2.74% while Germany's DAX is off 2.35% and London's FTSE 100 is lower by 1.06%.

World stocks, Asian currencies, commodities and government bond yields triggering concerns over the country's economic health and analysts say the global oil glut will last through next year as surging demand and faltering supply growth fail to clear the surplus.

What Is Moving the Markets

TOKYO (AP) — Global stocks sank Wednesday as China let its currency fall for a second day following a surprise devaluation that rattled global financial markets. China's government said the devaluation of the yuan was part of reforms meant to make its exchange rate more market-oriented.

But the decision has added to worries over slowing growth in the world's second-largest economy and that Western companies might find it harder to sell their goods there.

BEIJING (Reuters) - China's move to devalue its currency reflects a growing clamor within government circles for a weaker yuan to help struggling exporters, ensuring the central bank remains under pressure to drag it down further in the months ahead, sources said.

FRANKFURT/BRUSSELS (Reuters) - Initial bailout funds for Greek banks will be placed in a special account not on their balance sheets and lenders will receive fresh equity only after a "stress test" is finished by the end of October, several sources told Reuters on Wednesday.

As we noted earlier, the most surprising development out of this mornings repeat rout in the Chinese currency was not that it happened: after all as we laid yesterday out there is at least 10-15% in immediate downside left for the Yuan...

... but that shortly before the market close, China's central bank intervened via "at least one major Chinese state-owned bank sold large amount of dollar shortly before market closed, prompting rapid gain in yuan, according to two traders at onshore banks" Bloomberg reported adding that at least one state bank continuously sold dollar until USD/CNY reached around 6.38.

We bring this up because while we noted it when it happened just after 3am local time...

Euro area sovereign bond yields fell to record lows and the euro weakened after the European Central Bank (ECB) dramatically expanded its asset purchase program in early 2015. Some analysts predicted massive financial outflows spilling out of the euro area and affecting global markets as investors sought higher yields abroad. These arguments ignore balance of payments accounting, which requires any financial outflow from the euro area to be matched by a similar-sized inflow, absent a quick and substantial current account improvement. The focus on cross-border financial flows also is misguided since, according to asset pricing principles, the euro and global asset prices can move without any change in financial outflows.

LONDON (Reuters) - Markets around the world fell for a second day on Wednesday, with stocks, the dollar and emerging market currencies all under pressure after China pushed the yuan lower again overnight, boosting the appeal of top-rated government bonds.

Industrial production across the eurozone declined more than expected in June, as output fell in the region's three largest economies, another sign that lackluster investment continues to restrain economic activity.

NEW DELHI (Reuters) - Ford Motor Co plans to use low-cost engineering it learned in India to develop compact models for other emerging markets, executives said, emulating a strategy used by Asian rivals that outsell it in the world's fifth-largest auto market.

The recent slowdown in China's growth has caused concern about its long-term growth prospects. Evidence suggests that, before 2008, China's growth miracle was driven primarily by productivity improvement following economic policy reforms. Since 2008, however, growth has become more dependent on investment and overall growth has slowed. If the recent reform plans can successfully address the country's structural imbalances, China could maintain a solid growth rate that might help smooth its transition to high-income status.

The overnight market has been a repeat of yesterday's action, when following China's repeat 1.6% devaluation of the CNY (which was to be expected since the PBOC made it quite clear the fixing would be based off the market value, a value which continues plunging), the second biggest in history following Monday's 1.9% plunge, traders appeared stunned having believed the PBOC's lies that the devaluation was a one-off and as a result the E-Mini tumbled overnight, and is now 30 points lower from last night's PBOC fixing announcement, trading at around 2058, and far below the "magical" 200-DMA support line, which has now been solidly breached.

Perhaps the only saving grace right now is that the PBOC stepped in the last minutes of trading to prop up the yuan, or else today's bloodbath, not just across Asian FX as shown earlier, but in US and European equity markets would have been far, far worse. For Asia, however, it was too late: all major indices were firmly in the red, with the Nikkei 225 (-1.6%), ASX 200 (-1.7%) and Hang Seng (-2.4%) and Shanghai Comp. (-1.1%) pressured, which followed in tandem with US equity futures as the actions by the PBoC further added uncertainty and concerns of weak underlying Chinese growth. At the same time, JGBs gained 29 ticks amid a risk off tone.

But what was bad for stocks was delightful news for Treasurys, whose yields tumbled overnight, and at last check were trading just modestly off the overnight lows of 2.07%. We fully expect a 1-handle in the 10 Year within days. As RanSquawk notes, the latest move by the PBOC caused an uproar across various asset classes, with USTs now up over 1.5 points since Monday and stocks in Europe trading lower over 2% this morning amid fears of negative spill over effects. As a result, US inflation swap forward 5Y5Y rate now trades at the lowest sin ...

SHANGHAI (Reuters) - China's yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it, and sources said clamor in government circles to help struggling exporters would put pressure on the central bank to let it fall lower still.

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